Crop insurance industry fights back against ‘misconceptions'

By Sara Wyant

© Copyright Agri-Pulse Communications, Inc.

WASHINGTON, April 9, 2013 - As members of Congress prepare to write a new farm bill, members of the crop insurance industry are launching an aggressive campaign to make sure that lawmakers have access to information that they say dispels some of the most common criticisms.

Until the early part of the last decade, when crop insurance participation dramatically increased and the revenue products were developed, “crop insurance wasn't really on anyone's radar,” explained Tom Zacharias, president of the National Crop Insurance Services (NCIS).  “Now, farmers have indicated a much greater preference for crop insurance” and “there are a lot more federal dollars involved.  So explaining the various aspects of the program is important.

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In 2012, U.S. farmers spent more than $4.1 billion to purchase over 2.1 million policies covering over 282 million acres, according to USDA's Risk Management Agency. But because of the record drought, which blanketed much of the nation last year, crop insurance indemnities have already exceeded $16.1 billion to cover the losses.

Although many farmers view crop insurance as the most popular form of risk management in the farm bill, critics from both the left and right have taken aim at the program in recent years - arguing that federal subsidies for growers are too lucrative and can lead to planting in environmentally sensitive areas.

After years of attacking traditional farm program subsidies, the Environmental Working Group has turned its focus to the crop insurance industry, ranking as one of its most vocal critics.  Others, like the employee's union for the Farm Service Agency (NASCOE)  have criticized the public-private delivery system, suggesting that government officials would do a better job.

In its new, 24-page publication, “Crop Insurance: Just the Facts” the NCIS developed a detailed question-and-answer format to address some of these criticisms. In addition, the publication compares how crop insurance returns compare to traditional insurance returns, discusses the role of reinsurance, and addresses a host of other topics. 

Zacharias says crop insurance has “been an amazing success story” over the last two years.

“We went through the drought in the southern plains and the drought in Midwest and we were successful in getting everyone through the claims process and no calls for ad hoc disaster, “ Zacharias told Agri-Pulse in an interview.  “At the same time, it is a large chunk of federal dollars and federal dollars are tight. There will be various entities and interest groups looking at that funding.”

More information on crop insurance is posted on the NCIS website




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